April 11 (Bloomberg) -- Coldwater Creek Inc., a women’s
clothing retailer that hasn’t posted an annual profit since
2007, filed for bankruptcy protection with a plan to start
going-out-of-business sales in time for Mother’s Day.

Coldwater, founded as a catalog business 30 years ago, said
it intends to start liquidating inventory just before the May 11
holiday, a peak sales period for the retailer. The company
listed assets of $278.5 million and debt of $361.3 million in
Chapter 11 papers filed today in U.S. Bankruptcy Court in
Wilmington, Delaware.

The chain said revenue peaked at $1.1 billion in 2006. It
expanded from 198 stores in 2005 to 336 locations in 2007 before
the global economic downturn stunted its financial success and
triggered a series of management changes, according to court
filings. Sales at stores open at least a year plunged 17 percent
in the quarter ended Nov. 2.

The company joins women’s clothing chains Dots LLC and
Ashley Stewart Holdings Inc. in bankruptcy. Dots, with 400
stores, shut down after filing in January. Ashley Stewart, with
168 stores in 24 states, sought Chapter 11 protection on March
10. A drop in mall traffic also has helped to drive pizza seller
Sbarro LLC, toasted-sandwich chain Quiznos and the owner of Hot
Dog on a Stick to seek court protection since February.

‘Alternative Proposals’

Coldwater said last year that it was exploring strategic
alternatives, including a sale. The retailer reached out to more
than 75 parties as it sought refinancing or a buyer and
“publicly invited strategic alternative proposals of any
nature,” Chief Operating Officer James A. Bell said in a court
filing.

The shares have declined 95 percent in 12 months, including
a 17 percent drop yesterday. That valued the retailer at $5.8
million.

“The company’s declining liquidity position and the
challenging retail environment, together with the fact that we
have exhausted all other possibilities, requires that we take
this action,” Jill Dean, chief executive officer of Sandpoint,
Idaho-based Coldwater, said in a statement today.

Coldwater asked U.S. Bankruptcy Judge Brendan Linehan
Shannon to schedule a sale-approval hearing for May 6 in the
hope it can start the liquidation before Mother’s Day and
maximize sales for creditors, according to the filing.

Joint Venture

The retailer also asked the court to name a joint venture
of Hilco Merchant Resources LLC and Gordon Brothers Retail
Partners LLC, which specializes in such cases, as a “stalking-horse,” or lead bidder.

Coldwater said it reached agreement with lenders on the
liquidation plan and received a $75 million commitment in
debtor-in-possession financing from Wells Fargo & Co., a current
lender. Holders of common stock aren’t expected to recover any
of their investment.

Dennis Pence, a former Sony Corp. executive, started
Coldwater Creek as a catalog in 1984, selling women’s
accessories and gifts, according to a 2005 Businessweek profile
that highlighted the company’s rapid growth.

Coldwater began opening stores in the 1990s and had 379
locations as of Nov. 2, including 31 factory outlet stories and
seven days spas. The company has 330 employees at its
headquarters and more than 5,500 elsewhere, according to court
filings.

Losses Reported

Coldwater posted losses totaling $59.6 million in the first
three quarters of the fiscal year ended Feb. 2, according to
data compiled by Bloomberg. It had a loss of $81.8 million last
year.

An affiliate of Golden Gate Capital Corp. in 2012 extended
a $65 million senior secured term loan to Coldwater in return
for preferred stock that’s convertible to as much as 6.1 million
shares of common stock, according to company filings.

Comenity Bank and Groupon are the two biggest creditors
without collateral backing their claims, according to court
documents.

The case is In re Coldwater Creek Inc., 14-bk-10867, U.S.
Bankruptcy Court, District of Delaware (Wilmington).